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Mérida, 26th January 2012 (Venezuelanalysis.com) – The Venezuelan government has announced Venezuela’s “irrevocable” withdrawal from the World Bank affiliated arbitration body the International Centre for Settlement of Investment Disputes (ICSID).

According to an official statement released by Venezuela’s Foreign Ministry on Wednesday this week, the move has been taken on the grounds of defending national sovereignty and “to protect the right of the Venezuelan people to decide the strategic orientation of the social and economic life of the nation”.

The communication criticises the ICSID for being biased toward transnational corporations, citing that of the 234 cases handled by the arbitration body during its history, 232 were decided in favour of transnational.

The statement also declares the illegitimacy of the Washington-based arbitration body to decide on disputes between the Venezuelan government and transnational corporations, given that the Venezuelan constitution stipulates that such activities are to be “decided by the tribunals of the [Bolivarian] Republic, in conformity with its laws”.

On 8 January, Venezuelan President Hugo Chavez first announced the intention to leave the ICSID and his government’s refusal to accept the body’s decisions. The comments followed US oil giant Exxon Mobil’s move to bring a case to the body seeking more compensation from Venezuela’s nationalisation of its operations in the Orinoco Oil Belt in 2007.

In early January the Paris-based International Chamber of Commerce (ICC) awarded Exxon US$907 million for the cases, ten times less than what the company had originally sought.

Oil and energy minister Rafael Ramirez commented on Tuesday that new oil projects in Venezuela would not be subject to international arbitration, and that Venezuela’s withdrawal from the ICSID was because Venezuela’s public affairs “cannot be submitted to outside jurisdiction”.

Venezuela entered the ICSID in 1993, a move which the current foreign ministry has described as “the decision of a weak provisional government deprived of popular legitimacy, pressured by the transnational sectors that participated in the dismantling of Venezuela’s national sovereignty”.

Under ICSID rules there is a six month period before a country can leave the body after formally renouncing its membership. According to the body’s website, Venezuela currently has 21 cases pending against it.

The governments of Bolivia and Ecuador also left the ICSID in 2007 and 2009 respectively.